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Yen firms in Asia as investors pare risk
The yen rose against other major currencies in Asian trade Tuesday as
investors shed risky bets on credit market concerns despite a US government
bailout of two mortgage lenders, dealers said. The dollar slipped to 107.59
yen in Tokyo morning trade from 108.27 in New York late Monday. The euro
slipped to 1.4096 dollars from 1.4129 and to 151.66 yen from 152.96 on
persistent worries over the European economy.

The Australian and New Zealand dollars fell against the yen as traders
dumped so-called "carry trades" - risky deals in which players invest in the
high-yielding currencies with funding from the low-costing yen. Equities
markets worldwide surged Monday on Washington's unprecedented US takeover of
mortgage finance giants Fannie Mae and Freddie Mac on hopes of an easing of
a US housing crisis and resulting credit crunch.

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But by Tuesday markets had regained their cool, with Japanese equities and
government bonds both under pressure.
Forex market players were uncertain if the US plan would stave off further
credit-related losses, Chuo Mitsui Trust Bank chief strategist Yosuke
Hosokawa said.

"There are many areas in the government's plan that remain unclear, and
fresh concerns have cropped up over the US economy including its finances,"
Hosokawa said. "Markets are questioning: is the US really alright?" Market
participants were looking ahead to July home sales data in the US to be
released later in the day. If the figures fall below market expectations,
they could worsen the outlook for a recovery, dealers said.

Under the bailout plan, Fannie Mae and Freddie Mac will get
government-appointed chief executives and shed their mission of shareholder
profit. The Treasury agreed to inject 100 billion dollars if needed into
each.

The massive government intervention aims to contain the damage from the
worst housing slump in decades, which has rippled through the banking system
and led to multibillion-dollar losses for Fannie and Freddie. But some
traders said the plan could also become costly for the US taxpayer without
repairing the fundamental problems of the housing market.


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